In the acquisition of Company B by Company A, where does the additional $50 in revenue primarily come from?

The additional $50 in revenue primarily comes from synergies created from the merger. When two companies merge, they often realize combined efficiencies that can lead to increased revenue. These synergies may arise from cost reductions, new market opportunities, or enhanced capabilities that allow the combined entity to generate more revenue than the companies could individually. For instance, Company A might leverage Company B's customer base, cross-sell products, or streamline operations to boost sales.

New customer contracts signed by Company A would typically require additional sales efforts and time, making it less immediate as a source of revenue compared to the operational benefits seen in a merger. Differing revenue recognition policies during consolidation can affect how revenues are reported but do not inherently create additional revenue; they simply reflect the timing of recognized revenue. Increased market competition usually exerts pressure on prices and can lead to reduced revenue for companies, not an increase. Thus, the synergies from merging provide a more direct source of the additional revenue in this scenario.